Retirees and other investors seeking reliable passive income can now buy great Canadian dividend stocks at discounted prices. The market correction is a bit scary, and additional downside is certainly possible, but these stocks pay solid dividends and currently offer attractive yields for buy-and-hold investors.
Telus
Telus (TSX:T) trades for close to $25 per share compared to more than $34 at the peak in 2022. The slide in the share price is at the point where it looks overdone, and investors can now get a 5.75% yield from this communications stock.
Telus doesn’t have a media division, so its revenue stream should be less susceptible than that of its peers to the impact of an economic downturn. Telus primarily generates revenue from its mobile, internet, TV, and security subscription services. People and businesses need to be connected to each other and the world, regardless of the state of the economy. Households are unlikely to cut their TV subscription during difficult times. The TV service is often bundled with mobile and internet in a package and other discretionary spending will likely get axed before people give up their home entertainment.
In the first-quarter (Q1) 2023 earnings report, Telus said it expects adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to increase by at least 9.5% this year and operating revenue should jump by at least 11%. As a result, investors should see dividend growth continue in 2024.
TC Energy
TC Energy (TSX:TRP) trades near $55 at the time of writing. That’s off the 12-month low around $51, but still way down from the $74 mark the stock reached in June last year.
A general pullback in the energy infrastructure sector is largely responsible for the decline, although TC Energy has struggled with issues on a major project. The Coastal GasLink pipeline is now expected to cost at least $14.5 billion — more than double the initial estimate. Investors are not happy and the final tally could be higher depending on new delays. However, the project was already 87% complete at the time of the Q1 2023 earnings release, and management still expects cash flow to grow enough in the next few years to support annual dividend increases of at least 3%.
Investors who buy TRP stock at the current level can get a 6.7% dividend yield.
Bank of Nova Scotia
Bank of Nova Scotia (TSX:BNS) just raised its quarterly dividend from $1.03 to $1.06 per share. Adjusted fiscal Q2 2023 earnings came in solid at $2.17 billion, and the bank has a strong capital position with a common equity tier-one (CET1) ratio of 12.3%. This means Bank of Nova Scotia should have more than enough capital to ride out potential turbulent times if the global economy slides into a nasty recession.
The share price is down to $66 from more than $80 at this time last year. Bank stocks have fallen out of favour, as investors worry that soaring interest rates could drive a tidal wave of loan defaults. Bank of Nova Scotia and its Canadian peers are increasing their provisions for credit losses in anticipation of some rough quarters, but the extent of the drop in the share prices might be overdone.
At the time of writing, BNS stock provides a 6.4% dividend yield.
The bottom line on top stocks for passive income
Telus, TC Energy, and Bank of Nova Scotia pay attractive dividends that should continue to grow. If you have some cash to put to work, these stocks deserve to be on your radar.
